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Refinancing in Your Future? Use these Tips to Find Out
With interest rates as low as they are, determine if refinancing is right for you. It can help:
- Lower your monthly payment
- Reduce principal and build equity faster
- Shorten the term of your loan
- Decrease the amount of interest paid over the life of the loan
- Take cash out for another purpose
- Know your current home loan.
If you have an adjustable rate mortgage, know when your rate and payment will adjust. At current interest rates, what would your payment change to? Will it go up or down?
- Check your credit score.
You can do so once a year for free at annualcreditreport.com. Verify the credit bureau's information for accuracy. In today's market, maintaining excellent credit is crucial to securing the best rate for your loan.
- Think about how long you plan to stay in your current home.
If you are in an adjustable rate mortgage, you may want the security of a fixed rate. However, if you are fairly certain you'll move in a few years, refinancing may not be worth it.
- Know what your home is worth.
Your home will be appraised during the refinancing process—but it will generally help you to have a ballpark idea of what your home is worth to begin.